‘I am bearish on the pound and I think it will be lower a year from now. Similarly, while the U.K. economy will not unravel due to Brexit, I would expect the process to take a toll on growth for many years to come.’ – Erik Wiesman, MFS Investment Management (based on Bloomberg)
Even though the US NFP data came out strong on Friday, the earnings growth still disappointed, bringing doubts over a March rate hike, thus, turning the tide on the Greenback’s rally. As a result, the Cable traded flat that day, but began edging higher today amid a corrective decline in the US Treasury bond yields. Consequently, the GBP/USD pair now has the potential to reclaim the 1.22 major level, where the weekly pivot point is the nearest resistance. The 1.2250 is the next target, but is likely to remain out of reach, as the monthly S1 and the weekly R1 form another strong supply area there.
Bulls grew stronger over the weekend, as now 69% of all open positions are long, compared to 67% on Friday. At the same time, the portion of purchase orders barely changed, having risen from 53 to 54%.